As you may very well know from first-hand experience or witnessing it happening to someone else, a high salary doesn’t always equal wealth. Money isn’t very likely to spontaneously turn into more money but real estate has the ability to all but guarantee you a return. Investing in a property can be a great way to ensure your income and financial freedom into the future but the question remains, what can you do to make the most of your income?
A big income doesn’t automatically make you wealthy – it’s what you do with it that counts. Lower-income people can get wealthier than those in higher-income brackets if they invest in growing assets.
There’s a difference between good debt and bad debt. Buying a flashy car may make you look successful to your clients, but having a portfolio of properties may impress them even more. Try and borrow money for appreciating assets rather than depreciating ones.
Property leverages your time and money. Career professionals are very busy and so property is a great investment vehicle. It leverages your time and your money – both of which are limited. Once you have bought a property, it requires very little time to manage but continues to grow 24/7 in the long term.
Do the numbers. When you take into account rental income and tax breaks, property often needs to grow by 3-4% on average for you to make money. Find an accountant (who is a property investor themselves) to work the numbers for you.
Learn to delegate. It often pays for you to recruit other professionals to work for you. Consider hiring a buyer’s agent, valuer, accountant and renovator to work on your behalf. Clever investors spend a dollar to make two.
Renovate to add value. Renovations often add twice their value for whatever you spend, so consider buying slightly undesirable properties and get your initial deposit to go further.
What is cost of delaying your decision? If a $500,000 property increases on average by 10% a year, in the long term that’s $1000 a week of passive income you might be missing out on. How long do you want to delay your decision?